MAR-2-05 CO:R:C:V 732939 NL

Michael K. Tomenga, Esq.
McKenna, Conner & Cuneo
1575 Eye Street, N.W.,
Washington, D.C., 20005

RE: Country of Origin Marking of Crab Caught by U.S. Flag Vessels in the Soviet Exclusive Economic Zone

Dear Mr. Tomenga:

This is in response to your letter of December 5, 1989, on behalf of Marine Resources Company International (Marine Resources), in which you request a ruling concerning the country of origin marking requirements applicable to crab imported by Marine Resources.

FACTS:

Marine Resources will import crab processed from crab caught by U.S. flag vessels in the Exclusive Economic Zone (EEZ) of the Soviet Union. Prior to importation the crab will be processed aboard either the U.S. flag catching vessels or Soviet flag processing vessels by cleaning, cutting the legs from the body, boiling, blast freezing and packaging. After importation the crab will be sorted, graded, and repackaged in 20 pound cartons by the importer.

It is your contention that it would be proper to mark the containers of the repacked crab "Product of U.S.A.", since the crab was caught on the high seas by U.S. flag vessels and the processing, if any, aboard a Soviet-flag vessel does not render the crab a product of the Soviet Union.

ISSUE:

Is the imported crab subject to the country of origin marking requirements of 19 U.S.C. 1304?

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the U.S. shall be marked in a conspicuous -2-

place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article.

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.1(b), Customs Regulations (19 CFR 134.1(b)), defines "country of origin" as the country of manufacture, production, or growth of the imported article. Further work or material added to the article must effect a substantial transformation in order to render such other country the "country of origin". 19 CFR 134.1(a) provides that for purposes of the country of origin marking requirements, "country" means the political entity known as the nation.

The question at hand is substantially controlled by the decision of the Court of International Trade in Koru North America v. United States, 12 CIT ___, 701 F. Supp. 229 (1988). In Koru the CIT reaffirmed the special rule of origin applicable to fish which provides that on the high seas the country of origin of fish is determined by the flag of the catching vessel. See, Procter & Gamble Mfg. v. United States, T.D. 45099 (1931), aff'd, 19 CCPA 415, C.A.D. 3488, cert. denied, 287 U.S. 629 (1932). In Koru the Court further found that the fact that fish were caught in the EEZ of New Zealand did not affect the applicablility of this rule for purposes of country of origin marking. A nation enjoying preferential fishing and other rights within its EEZ does not, under the United Nations Convention on the Law of the Sea (UNCLOS), enjoy full sovereign territorial rights within its Zone; "...certain elements of the high seas are retained in an EEZ." 701 F.Supp 232. Thus, "it would be improper to characterize fish caught within a country's EEZ as originating within that country on the basis of their being caught within the EEZ." id.

In this instance, applying the holding above, the fact that crab was caught in the Soviet EEZ is of no legal significance. The Soviet EEZ is not, for purposes of country of origin marking, Soviet territory, but rather is considered the high seas. Therefore, applying the traditional rule, if the flag of the catching vessel is U.S., the crab is considered a product of the U.S.

If, however, the crab is substantially transformed in another country prior to importation into the U.S., it becomes a product of that country. 19 CFR 134.1(b). The processing of the crab on a Soviet flag vessel as described in your letter is not, in our opinion, a substantial transformation. The cleaning, cutting, boiling, blast freezing and packing of the crab does not result in a change in the name, character or use of the crab. Such processing of food is similar to the cutting, blanching, -3-

packaging and freezing of broccoli (HQ 729365)(June 2, 1985, published as C.S.D. 86-26); and the cooking, peeling, deveining and freezing of shrimp (HQ 731763, May 17, 1989). With respect to crab meat, Customs has ruled that the domestic processing of imported crab meat by thawing, sorting, blending with domestic crab meat, canning and pasteurization does not constitute a substantial transformation. (HQ 732337, August 16, 1989).

Also instructive is HQ 109504 (August 12, 1988; affirmed by HQ 109793, May 31, 1989), in which Customs considered whether, for purposes of the coastwise laws, the processing in Korea of crab caught by U.S. flag vessels resulted in a new and different article within the meaning of section 4.80b(a), Customs Regulations (19 CFR 4.80b(a)). After boiling, removal of the backs, freezing and glazing on a U.S. flag processing vessel, the crab were processed in Korea by thawing and cleaning; removing the gurry and gills; grading the arms, legs and claws; in some cases, scoring the shells; in other cases the shells were largely removed, and finally, in some cases the meat was entirely removed from the shells. Customs ruled that only in the cases where the crab was largely or wholly shelled did the manufacturing result in a new and different product. While decided under the coastwise laws rather than under the marking statute, the ruling's conclusion as to the extent of processing of crab to yield a new and different product is consistent with our own view in this case that the processing aboard a Soviet vessel does not substantially transform the crab into the product of another country.

Thus, while the processing aboard a Soviet vessel takes place on the territory of another country, by virtue of the rule of the flag, the processing in this instance is not a substantial transformation and the crab retains its U.S. origin.

Section 134.25, Customs Regulations (19 CFR 134.25), imposes an obligation upon the importer of "J-List" articles, such as the crab at issue here, to certify that if the importer repacks the articles the articles will be marked in accordance with the requirements of Part 134, or to notify a subsequent purchaser in writing of the requirement that if repacked, the articles must be marked in accordance with Part 134. However, since the crab is not of foreign origin, it is not subject to the country of origin marking requirements of Part 134 and specifically, the requirements of certification and notice to subsequent purchasers set forth in 19 CFR 134.25 do not apply to the crab.

HOLDING:

The crab caught by U.S. flag vessels in the Soviet Exclusive Economic Zone is not, for purposes of country of origin marking, a product of the Soviet Union. Further, because the processing -4-

of the crab aboard a Soviet vessel is not a substantial transformation, it does not become Soviet origin processed crab. Since the crab is not of foreign origin, it is not subject to the country of origin marking requirements of 19 U.S.C. 1304 and 19 CFR Part 134. Specifically, upon repacking after importation the importer is not subject to the certification and notice to subsequent purchasers requirements of 19 CFR 134.25.

Sincerely,

John Durant
Director, Commercial
Rulings Division